Why this Saudi Arabian fund chose to invest in the ‘Udaan’ of Morocco

In January 2022, Morocco-based business-to-business (B2B) ecommerce startup Chari raised a bridge round at a valuation of $100 million. 

Investors, including Afrimobility (the venture capital arm of AKWA Group), AirAngels (Airbnb Alumni Investors' Syndicate), and Khwarizmi Ventures—a Saudi Arabia-based early-stage venture capital fund—participated in the round. 

In fact, this is the Saudi Arabian venture fund’s first investment in Morocco. 

Having seen similar businesses in other geographies, Abdulaziz Al-Turki, Managing Partner of Khwarizmi Ventures, recalls the first meeting with the founders. 

“For us, it was about founding a team with a super-strong background. We are in this business where we look at visionary founders. Our investors give us money to invest in big dreams and companies that can give large returns,” Abdulaziz tells YS Gulf.

Founded in January 2021 by Ismael Belkhayat and Sophia Alj, Chari digitises small and medium retailers (B2B fragmented retail sector) in French-speaking African nations—Morocco and Tunisia. 

Building the ‘Udaan’ of Morocco 

B2B ecommerce unicorn Udaan has a network of over three million registered users and 25,000-30,000 sellers across 900 cities in India and has over 1.7 million retailers, chemists, farmers, etc., doing over 4.5 million transactions per month.

And Chari aims to become the Udaan for French-speaking African nations. 

The Casablanca, Morocco-based startup’s Android and iOS apps help small retailers order products from local manufacturers and global fast-moving consumer goods (FMCG) companies within 24 hours. 

It has tied up with Nestle, Kellogg's, P&G, etc., to supply these FMCG brands’ products through its B2B ecommerce platform to local mom and pop stores.

The startup takes between 5-20 percent margin from suppliers. It also charges manufacturers and FMCG brands for the data it shares, including the number and type of products sold and customer information. 

At present, Chari is building a Buy Now Pay Later (BNPL) service based on merchants’ registration date, average basket order, amount of money lent, and order frequency. Merchants receive a negative balance between -$100 and -$500 on their digital wallets for 30 days where they are not charged. 

Today the African BNPL and B2B markets are growing with the presence of players like LipaLater (Kenya), TradeDepot (Nigeria), ThankUCash (Nigeria), Payflex (South Africa), Carbon Zero (Nigeria), etc. 

To date, Chari has raised $5 million in funding.

“If you look at the business model, it is about giving retailers access and managing their supply logistics. After establishing credibility and trust, the next step is to find out how else you can serve these retailers—by lending and allowing them financial power to grow their businesses. Chari is also extending its end customer with options like BNPL,” says Abdulaziz. 

Starting up 

Serial entrepreneur and Chari co-founder Ismael Belkhayat, says, “For me, starting any company, even my earlier startups, was about realising the segment has a challenge and needs a complete solution.” 

Born in Morocco, Ismael studied in Europe and pursued his Master’s degree at Cornell University, the US. During his stint at BCG, Paris, Ismael was instrumental in setting up BCG’s regional office in Morocco. 

But it was not enough for Ismael. After working for three years at BCG, he decided to startup.

“This was eight years ago. My first startup was similar to Uber. However, a more rental-based startup, and got acquired by Avis Rental Cars. The next company was a property portal. When you look for a house in Morocco, it means going door-to-door in apartment complexes to see if a house is vacant. We had faced these problems first-hand,” Ismael says. His second venture was bought by the Propertyfinder Group. 

Building for Africa

The idea for Chari, too, came from a personal pain point. Sophia, a former consultant with McKinsey, was tasked to understand how small retailers and FMCGs operated in the region. 

Ismael and Sophia visited several stores and realised that many small retailers faced significant problems. 

Ismael explains, “Sometimes, for some goods, the shopkeeper of these mom and pop stores would ask us to wait as one of the supplier trucks would stop by. Usually, most of these trucks are manned by one person, and the shop owners leave the customer hanging to help them carry the goods.” 

He continues, “When I asked him why he does this, the shopkeeper responded saying—if one customer leaves, there will be others, but if the supplier goes, I simply won’t have goods for a week for my customers.”

Realising that this problem is quite large and persists across the French-speaking African region, Ismael and Sophia decided to expand Chari’s operations to Tunisia in early 2022. 

In the following June, the B2B ecommerce startup acquired Ivory Coast startup Diego that connects neighbourhood retail shops to FMCG companies. The startup was founded in 2021 by Amidou Diarra and Ali Ouattara (former managers at Glovo and PepsiCo).

In October 2021, the startup acquired Karny, a Morocco-based ledger book startup that provides credit and bookkeeping services. 

Last year, Chari won ‘Disrupter of the Year’ at the Africa CEO Forum in Abidjan, Ivory Coast.

“We aim to help small stores compete with larger supermarkets and online platforms,” says Ismael.